MassBudget's
State of Working Massachusetts presents a snapshot of the
current economic conditions facing workers in Massachusetts, along with
some of the long-term trends affecting workers and their families.

Introduction

MassBudget is pleased to
present this State of
Working Massachusetts
2017 report. Each year, in our State of Working
Massachusetts reports,
we look at how Massachusetts is faring with respect to jobs and the
labor force, wages and income, and education. Throughout the report, we
present data available from the U.S. Census Bureau, U.S. Bureau of
Economic Analysis, U.S. Bureau of Labor Statistics, and various
Massachusetts government agencies.1
We invite you to read more
about all of these topics and to explore the many other issues we cover
and reports we provide on the MassBudget
website.

Jobs and the Labor Force

Eight years into the recovery from the Great Recession,
Massachusetts
is seeing more and more people joining the labor force, which has grown
3.2 percent so far in 2017 — faster than any other state in
the nation. Massachusetts has added close to 300,000 jobs
since the
start of the Great Recession in 2007, representing 9.0 percent job
growth — among the highest rates of job growth in the country
over that time.

Wages and Income

Increases in jobs and in the overall labor force are signs of
a strong
and growing economy. Unfortunately, job gains are still not translating
into strong, broad-based wage growth. This continues a long-term trend
in Massachusetts and in the United States: economic growth is not
translating into wage and income growth for most workers and their
families. Since 1979, median household income in Massachusetts has
barely budged, growing only half a percentage point each year after
adjusting for inflation. By contrast, among the highest-income one
percent of households, income has risen by 4.3 percent annually.

This is a national pattern, but it is particularly pronounced
in
Massachusetts, where the
highest-income one percent of households have
seen more rapid income growth than in any other state: 341
percent
between 1979 and 2014 (the most recent year for which data is
available). Ten percent of all Massachusetts income went to the
highest-income one percent of households in 1979. In 2014 it was 25
percent.

This growing inequality is part of what is known as the
“Great Decoupling”—the period, beginning
in the 1970s, when growth in wages and income for most workers began to
flatten even while productivity continued to increase.

The highest-income households, who derive relatively little of
their
income from wages, have made enormous gains, but what if all
Massachusetts households had shared equally in income growth since
1979? The median household income would be $88,300—37 percent
higher than it is today.

While the above scenario of equal growth is hypothetical, we can
observe one thing with certainty: since the recession of the
early-1990s, the only
times Massachusetts’s lowest-paid
workers have seen wage increases have been after an increase in the
state minimum wage. After declining by almost 10 percent
between 2008
and 2014, wages among the lowest-earning 10 percent of workers have
increased by 8 percent since the state’s minimum wage was
increased by a dollar each year in 2015 and 2016.

Education

In 2016 Massachusetts became
the first state ever with 50 percent of
its workforce holding a four-year college degree. Across
the nation,
states with the best-educated workforces consistently have stronger
economies than those with less well-educated workforces. Massachusetts
and New Jersey have the two best-educated workforces and the two
highest median wages in the United States.

Massachusetts is a prime example of the importance of access
to higher
education, as shown by nearly four decades of growth in the
“college wage
premium” — the additional
amount earned by workers with a college degree compared to those who
have not attended college. Since 1979, while actual wage growth has
been flat or weak for most Massachusetts workers, including those with
a college education, the relative earnings benefit of a
bachelor’s degree has grown steadily. By 2016, the median
wage for Massachusetts workers with a college degree was about twice
that of workers with no more than a high school diploma.

Expanding access to higher education clearly benefits both
individual
students and the overall state economy. But the state reduced funding
for public higher education by $3,000 per student from 2001 to 2016.
Meanwhile, costs have been shifted onto students, with tuition and fees
rising $4,000 per student over the same period. (Both amounts have been
inflation-adjusted to 2016 dollars.) The University of Massachusetts
recently announced a 3 percent tuition increase for the fiscal year
2018, marking the third consecutive year of increases.

Strong job growth and the best-educated workforce in the
country are
key to making and keeping the Massachusetts economy one of the
strongest in the nation. But stagnating wages and income threaten to
leave many workers and their families behind. We hope this State of
Working Massachusetts 2017 report empowers the people of
Massachusetts
to focus on the challenge of building a Commonwealth in which everyone
can contribute their full potential and all can benefit from a strong
and vibrant economy.

To read these sections in their entirely, click on the name of
the section on the ribbon below.

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1Much
of the underlying data in the State
of Working Massachusetts 2017
comes from Economic Policy Institute (EPI) analysis of Current
Population Survey data. To read more about their methodology in
calculating income, wages, and other measures used throughout this
report, please refer to the appendices of EPI’s The
State of
Working America 12th edition.